Problem 16-19 (Algo) Financial Ratios for Assessing Profitability and Market Performance [LO16-5, LO16- 6] Paul Sabin organized Sabin Electronics 10 years ago to produce and sell several electronic devices on which he had secured patents. Although the company has been fairly profitable, it is now experiencing a severe cash shortage. For this reason, it is requesting a $630,000 long-term loan from Gulfport State Bank, $165,000 of which will be used to bolster the Cash account and $465,000 of which will be used to modernize equipment. The company's financial statements for the two most recent years follow: Assets Current assets: Sabin Electronics Comparative Balance Sheet This Year Last Year Cash Marketable securities. Accounts receivable, net Inventory Prepaid expenses Total current assets. Plant and equipment, net Total assets Liabilities and Stockholders' Equity Liabilities: Current liabilities Bonds payable, 12% Total liabilities Stockholders' equity: Common stock, $ 20 par Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 119,000 0 640,000 1,075,000 30,000 1,864,000 1,933,600 $ 3,797,600 $ 280,000 10,000 430,000 725,000 35,000 1,480,000 1,460,000 $ 2,940,000 $ 810,000 900,000 1,710,000 820,000 1,267,600 2,087,600 $ 3,797,600 $ 430,000 900,000 1,330,000 820,000 790,000 1,610,000 $ 2,940,000 Sabin Electronics Comparative Income Statement and Reconciliation